Businesses

The Inflation Reduction Act (IRA) expands opportunities for Iowa businesses to take advantage of cost-saving tax credits to generate and store clean energy, electrify fleet vehicles, and to reduce energy waste.

Available Programs & Grants

Renewable Energy

Bonus Credits for Investment Tax Credits and Production Tax Credits

Under the Inflation Reduction Act, projects qualifying for an ITC or PTC may be eligible for "adder" or bonus credits for projects meeting certain requirements. See additional details for criteria.

Emissions-Based Production Tax Credit

Technology neutral production tax credit is an emissions-based production tax credit that is neutral and flexible between clean electricity technologies. Credit of 1.5 cents/kwh (inflation adjusted to 2.8 cents/kwh). Taxpayers choose between a PTC (45Y) and an ITC (48E).

Credits start January 1, 2025 and begin to be reduced after January 1, 2034 or when emission targets are achieved (i.e., the electric power sector emits 75% less carbon than 2022).

Credit of 1.5 cents/kwh (inflation adjusted to 2.8 cents/kwh).

Available Programs & Grants

Energy Efficiency

Energy Efficient Commercial Building Deduction

Building owners can get a section 179D tax deduction for new construction and retrofits to commercial buildings. The energy efficiency improvements, including lighting, envelope design, and heating and cooling, must reduce the energy consumption by a minimum of 25% when compared to a building that meets the minimum requirements of Reference Standard 90.1 of the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE).

Building owners can get an additional 179D deduction every three years for subsequent energy efficiency improvements.

  • Deduction: The deduction for a 25% reduction is $0.50 per square foot, increasing by $0.02 per square foot for every additional percentage point reduction, capped at $1.00 for a 50% reduction.
  • Bonus: A bonus exists for prevailing wage and apprenticeship. If the prevailing wage and apprenticeship requirements are met, the deduction for a 25% reduction earns $2.50 per square foot, increasing by $0.10 per additional percentage point of reduction. The maximum deduction with the bonus totals $5 per square foot for a 50% energy reduction.
New Energy Efficient Home Credit

Builders and contractors of single-family and manufactured homes can collect a credit for meeting the Energy Star Program requirements and the DOE Zero Energy Ready Home criteria. Builders and contractors of multifamily homes can collect a credit for each Energy Star-compliant unit or Zero Energy Ready Home-compliant unit.

Available through December 31, 2032.

  • Single-family and Manufactured Homes: Can collect up to $2500 for meeting the Energy Star Program requirements, and $5000 for meeting the DOE Zero Energy Ready Home criteria.
  • Multifamily Homes: Can collect $500 per Energy Star-compliant unit and $1000 per Zero Energy Ready Home-compliant unit.
  • The credits on multifamily homes increase to $2500 and $5000 respectively if they satisfy prevailing wage requirements.
  • Residential buildings that are four stories tall or more are eligible for both this credit and the section 179D deduction.

Available Programs & Grants

Electric Vehicles

Commerical Clean Vehicle Credit

A $7,500 tax credit tax for the purchase of electric vehicles or other qualified clean vehicles for commercial vehicles under 14,000 lbs. and a $40,000 tax credit for commercial vehicles over 14,000 lbs.

Available through December 31, 2032.

(1) In general

The lesser of-

(A) 15 percent of the basis of such vehicle (30 percent in the case of a vehicle not powered by a gasoline or diesel internal combustion engine), or

(B) the incremental cost of such vehicle.

(2) Incremental cost

The incremental cost of any qualified commercial clean vehicle is an amount equal to the excess of the purchase price for such vehicle over such price of a comparable vehicle.

(3) Comparable vehicle

Comparable vehicle is any vehicle which is powered solely by a gasoline or diesel internal combustion engine and which is comparable in size and use to such vehicle.

(4) Limitation

The credit shall not exceed-

(A) in the case of a vehicle which has a gross vehicle weight rating of less than 14,000 pounds, $7,500, and

(B) in the case of a vehicle not described in subparagraph (A), $40,000.

Available Programs & Grants

Clean Water & Resilient Infrastructure

Water Infrastructure Finance and Innovation Program (WIFA)

This program provides credit assistance to creditworthy borrowers for:
- Projects that are eligible for the Clean Water SRF, notwithstanding the public ownership clause
- Projects that are eligible for the Drinking Water SRF
- Enhanced energy efficiency projects at drinking water and wastewater facilities
- Brackish or seawater desalination, aquifer recharge, alternative water supply, and water recycling projects
- Drought prevention, reduction, or mitigation projects
- Acquisition of property if it is integral to the project or will mitigate the environmental impact of a project
- A combination of projects secured by a common security pledge or submitted under one application by an SRF program

Tools & Resources

Investment Tax Credits and Production Tax Credits

Under the IRA, owners of renewable energy projects will be able to choose between an Investment Tax Credit (ITC) or Production Tax credit (PTC). An ITC reduces the cost of installing clean technologies, while PTCs credit project owners for the production of their clean technologies. Stand-alone storage is only eligible for the ITC. For greater detail on the timelines and credit amounts, see the linked tables:

Disclaimer: Nothing in this summary should be interpreted as tax or legal advice.